When we came across a study highlighting that around 80% to 90% of E-commerce businesses fail, we asked our E-commerce experts to know its root cause.
And the only answer we could hear is a low Return on Investment (ROI).
Money speaks, right?
We say in E-commerce industries, it speaks the loudest in the voice of ROI.
Therefore, in this comprehensive write-up, we will look at how strategic outsourcing can be your secret weapon in maximizing E-commerce ROI. Here’s a sneak peek into what we will cover in this blog:
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First, we will break down the concept of E-commerce-outsourcing ROI for you.
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Then, we will help you bring to light why it is important to measure ROI.
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Further, we will move on to share in-depth insights on how outsourcing different E-commerce tasks can speed up your E-commerce return on investment.
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Meanwhile, on the journey, you will also learn how to calculate the approximate time or money that you can save with our E-commerce ROI formula.
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Finally, we will provide you with a recap of everything you have read so far.
Shall we get started?
Let’s do it by breaking down the concept of E-commerce-outsourcing ROI for you.
How Does the E-commerce-Outsourcing ROI Differ from the Conventional ROI?
So, conventional ROI is simply the profit you make from your investment. For example, you invested 50 USD in paid media campaigns and generated leads worth 120 USD. That is a net profit of 70 USD and an ROI of 140%
Now, if you get,
| Exactly 100% ROI | Over 100% ROI | Below 100% ROI |
|---|---|---|
| It is considered a break-even point. No profit, no loss. | It signifies a profit. You received more than you invested. | It indicates a loss. You received less in return. |
Thus, in the above example, 140% ROI is a positive ROI.
But how is E-commerce-outsourcing ROI different from it?
E-commerce-outsourcing ROI is a bit different from the traditional ROI. While the traditional ROI focuses on direct profit generation, E-commerce-outsourcing ROI is inclined toward cost savings. The savings your online business makes when you choose to delegate your E-commerce tasks to external service providers.
Your product descriptions are not there only to show off but also to guide your customers in the right direction.
In other words, it involves comparing the expenses of handling assignments internally, i.e., in-house, to the fees associated with outsourcing them.
Let's see what it denotes through an example:
In-House: Suppose you run an E-commerce store with a dedicated in-house customer service team of 5 members, which includes the following expenses:
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Salaries of 5 customer representatives: Approximate 20,000 USD/month (Source: Glassdoor)
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Cost of the software used in Customer Management System (CMS): Estimated 1000 USD/month for premium features (Source: WebFX)
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Office rent and other utilities: Around 1500 USD/month for 5 users, depending upon the location (Source: PriceItHere.com)
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Total in-house expenditure: 22,500 USD/month
Outsourcing: You were not happy with the investment and outcome ratio. Hence, you decided to outsource the entire E-commerce customer support service. The amount quoted by your external service provider is 5,000 USD/month for 5 representatives.
Your ROI:
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Cost Savings: 22,500 USD (internal cost) - 5,000 USD (outsourcing cost) = 17,500 USD/month
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ROI: [(Cost Savings)/ (Original Cost)] x 100 = (17,500 USD/22,500 USD) x 100 = 77.77%
As you can see, even though the ROI is below 100%, you will still consider it a positive ROI. This is because, as mentioned earlier, outsourcing ROI focuses on cost savings instead of direct profit generation. In that way, your business will spend 5000 USD/month, which is 77.77% less on the task than on managing it internally.
Well, you might be wondering if I should really bother this much about ROI.
Here is why we say, “You Should”.
Why Is Measuring E-commerce-Outsourcing ROI Important and How to Measure It?
To remain competitive in the changing E-commerce landscape and multiply savings, measuring the ROI of E-commerce outsourcing is vital. We say so as it helps you in:
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Making informed decisions about whether outsourced tasks bring expected financial gains or not.
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Making informed decisions about whether outsourced tasks bring expected financial gains or not.
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Prioritizing tasks and assigning resources more efficiently.
Here are a few factors that you can take into account while measuring your E-commerce ROI:
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No doubt, cost savings remain one of the most crucial parameters. But, apart from financial gains, you should pay due attention to non-financial metrics, like enhanced service quality and reduced TAT (turnaround time).
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Keeping track of sales figures before and after outsourcing is essential. It lets you know whether outsourcing tasks like product listing optimization, upselling, or cross-selling are contributing to higher conversion rates or not.
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Analyze how customer satisfaction and ratings have changed with outsourcing. What new ideas and innovations have made their way to your E-commerce ecosystem, and what kind of unprecedented expertise does your organization leverage today? All these factors play a significant role and must not be overlooked while assessing the impact of outsourcing on your ROI.
However, measuring outsourcing ROI doesn't come quickly; it has its own set of challenges. The most recurring ones are as follows:
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Lack of comprehensive and reliable financial and non-financial data regarding savings and advantages.
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Inability to quantify intangible benefits like enhanced customer satisfaction, faster turnaround time, improved service quality, social media engagement, brand advocacy, etc.
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Insufficiency in core areas like finance, data analysis, and accounting leads to the absence of clarity in deriving the actual ROI from outsourcing.
Nevertheless, finding the right outsourcing partner can help you overcome these challenges and make the most out of your E-commerce-outsourcing investment.
To gain more understanding, read our blog on A Guide for Businesses to Find the Perfect Partner for Outsourcing E-commerce Management Services
After knowing about the right outsourcing partner, your next focus will likely shift toward the potential cost and efforts you can save when you hand off specific E-commerce tasks.
Allow us to explore the possibilities through a few examples. The first in the series is pre-sales support.
How Pre-Sales Support Outsourcing Can Help You with Your ROI?
Before comprehending how pre-sales support's ROI can be perked up through outsourcing, we need to know why focusing on pre-sales support outsourcing ROI is essential. So, your pre-sales support team acts as the first point of contact between your products and customers. They answer product-related questions and address their pain points, ensuring consumers have a clear interpretation before making the final purchase.
At this moment, having a positive ROI from outsourcing means your investment is generating tangible results. By partnering with an outsourcing agency for this task, you not only save on salaries, infrastructure costs, and training efforts but also get the upper hand with:
Lead Database
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Your potential leads are bifurcated into meaningful groups, with old and inactive ones being eliminated.
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Duplicate leads are removed, and you are kept updated on the valid ones.
Follow-Up Strategy
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Online queries get responded to within an hour of receiving them
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Personalized e-mails or information are sent based on the kind of product they purchase or show interest in.
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Various communication channels like chats, e-mails, and phone calls are used to ensure a wider reach.
Lead Generation Experts
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You get reduced digital media expenditure.
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Genuine and convertible leads are added to your sales bucket.
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Access to critical insights, multiple channel approach, and online and offline networking becomes a regular thing.
Interested in knowing how much you can save?
Calculate it yourself!
But, as we mentioned, to quantify your ROI in its real essence, go beyond cost reduction and take into care aspects like:
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Increase in conversion rates.
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Scaling down of lead generation timings
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Rise in qualified leads
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Improvements in customer satisfaction scores
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Enhanced customer retention
That being explained, let’s move on to SEO.
How Outsourcing E-commerce SEO Improve ROI?
We all know that SEO is one of those tactics that we must get right to stay competitive in the market. However, what we don't realize is just because we are implementing SEO doesn't mean our strategy is working; we might even be losing money.
And the only way to know if we are doing it the right way is to calculate in-house ROI and then compare it with the one you received from outsourcing. We recommend doing it because it enables you to:
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Validate the money that you are spending on your SEO
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Determine what is working and what is not for your website and business
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Experiment with your SEO and refine your site strategies for more impressions, clicks, and conversions
The above will, in turn, let you:
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Leverage high-ranking pages as authority pages, helping you increase the ranking of other pages.
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Tailor content with keywords that your consumers are actually searching for
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Target the ideal audience from the start, thus decreasing your bounce rate
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Reduce the cost of consumer acquisition.
So, let's calculate and find out if you are doing it correctly or not.
But before you make the final decision, we want you to recall that SEO is not just about conversion. It is equally about:
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New subscribers
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Increased downloads of case studies
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Rise in service queries
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Improved content traction
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Advanced webinar or free consultation registrations
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Raised social media followers
Further, let's explore what customer support outsourcing has in store for you.
Why Should Outsourcing Customer Service Be Your Go-To Option for an Enhanced E-commerce ROI?
Imagine a customer named Emili shopping from Germany around 9 PM at your E-commerce store, and it is 6 PM PST in Los Angeles. Emili has finalized her product but is unable to make a payment as her payment is not going through. She tried reaching out to your in-house customer service team, but it is unavailable till tomorrow morning.
Such scenarios can lead to the following:
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You are losing out on your potential customers
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Your consumers buying from your competitors
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You are receiving negative reviews from your users
On the other hand, delegating this task to a team that is available 24/7 and has unmatchable expertise irrespective of location can lead to the following:
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Your customers receive prompt responses to their queries regardless of their location
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Your users are turning into loyal customers and brand ambassadors
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You are getting invaluable marketing and product development insights
Now, we will come back to ROI and see how this outsourcing can impact your return on investment.
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Prompt responses will turn into satisfied customers, which then turn into increased sales and conversion rates.
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You will save on office space, equipment costs, and employee benefits.
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You will witness reduced order cancellations and an improved brand reputation.
Calculate and know how much you can save by outsourcing
Finally, we would like to leave you with some data analytics and reporting insights!
What Can You Expect Regarding E-commerce ROI When Outsourcing Data Analytics and Reporting?
Data analytics and reporting are complex; establishing a perfect in-house team can take years. Moreover, even if you manage to develop that ideal team, maintaining it with proper recruitment, training, infrastructure, and technology is substantially expensive.
Hence, many businesses choose to outsource this to third-party teams and experts like FBSPL This arrangement allows them to:
Slash Expenses
Since the external service provider has its own infrastructure in place, you save on training employees, their salaries, technology, licensing fees, and much more.
Save Time
Whether you are a small business or an MNC, there are chances of generating more data than you can keep track of. Churning these data and taking out actionable insights can be daunting. Outsourcing this task not only saves your time but goes beyond this, and their experts provide you with in-depth data analytics with complete, actionable understandings, contributing to your company's overall success
Scale Services
Business requirements keep changing, and outsourcing caters to these needs and provides convenience in scaling data analytics and reporting resources as per your growing needs. No more worries about hiring additional team members during peak seasons or downsizing during rest periods.
Skip Confusion
With an outsourcing agency, you receive a third-party view of your business operations. You get to notice issues that you might not have seen on your own. And above everything, you get solutions in a more organized, professional, and digestible way. Having this information at your fingertips empowers you to make informed decisions and boost revenue.
Confused about which E-commerce service to outsource to yield the most revenue?
Our experts can guide you. They assess and identify which part of your operation is time-consuming and can be outsourced to free up resources and maximize revenue growth.
In a Nutshell 
